At the start of the fourth quarter, the vacancy rate in officebuildings in the Valley dropped to 9.7%, down from 9.9% at thestart of the third quarter, according to a recent study by CBRichard Ellis. During the third quarter, more than 480,000 sf ofoffice space was absorbed.

"The national economy is good and the local market is good inthe sense that existing tenants are growing in size, and there isan influx of groups from out of town," Jerry Roberts, SVP of officeproperties with CB Richard Ellis, told GlobeSt.com. "We havetransitioned a little bit from more of a sale office place to moreof a regional headquarters market."

National companies that have experimented in Phoenix with smallsales offices or call centers have discovered that the temperateweather, available workforce and relative low cost of living makesit a place to develop larger operations, Roberts says.